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The Bulgarian economy is growing with fast rates since the beginning of 2000. Property prices in Bulgaria's regional centers have increased 2 to 3 times over the last four years. Such high levels of growth are unprecedented in normal market situations. Typically, a property value can double within the timeframe of 9-10 years. This takes into account both cycles of growth and decline. For the Bulgarian property market the increase is up to 200% in only a 4 year period, which shows an increasing confidence in the country's prospects. In September 2002 a sales index for real estates on the Bulgarian market (REMI) was introduced. Bulgaria is the first country in the Central and Eastern Europe to introduce such national index for real estate sector. It is considered to be a solid indicator of property investment activity and development. Starting from 100 points in September 2002 the REMI index has reached 174.4 points in July 2005. The UK newsletter Property Secrets:
“Bulgaria currently offers investors the opportunity to buy properties at some of the lowest
prices in Europe, close to beautiful beaches or ski resorts, and benefits from the dual
attractions of marvelous weather and a very low cost of living.” The prices of the properties increased with 18.2% in 2003 for the whole Bulgarian market. This rise for 2004 reached 30.9%. At the beginning of 2004 the Bulgarian property market was already a hot investment opportunity although many foreigners showed great reluctance to invest in an emerging market. The main factors that contribute to the advance of the Bulgarian real estate market are the stable political situation, the improvement of the infrastructure, the increasing popularity of Bulgarian sea and ski resorts, the low cost of living and the influx of foreign investment. The high growth in the market is expected to continue until Bulgaria’s accession in the EU in 2007 and maybe some time after that. Bulgaria is now experiencing an influx of investment from the EU countries in the tourism sector and in the infrastructural projects and property prices are rising accordingly. The demand for properties on the Bulgaria’s real estate market has led to the development of many new constructions at the places of interest. The construction services and other real estate related services as selling and buying, maintenance, managing and security are constantly developing and have reached a good quality necessary for foreign investments. Reforms in the banking sector, better credit conditions and the law for foreign investments allowing property purchase by foreigners resulted in increased demand for real estates on the Bulgarian property market.During 2004 and 2005 the demand for properties in Bulgarian hot spots grew higher than the supply, which made the real estate investments very attractive for their fast return of investment and liquidity. Despite the intense construction work in the hot locations, the properties offered still don’t meet the growing demand. There are also factors that draw back the foreign investment, as the quality of some constructions and the lack of transparency on the property market. To recapitulate, the emerging property market in Bulgaria experiences an intense growth because of the active economy and the strong foreign investments influx. The figures show an increase in the property prices of 20-30% per year and the predictions are that this trend will be kept at least until the accession of Bulgaria in the EU. Still the prices are relatively cheap, as the cost of living in Bulgaria is lower than in the Western European states. The real estate related services and bank services, including mortgages conditions, are constantly improving in order to meet the high criteria of the EU countries. The demand for properties in Bulgaria is high and stimulates the construction of new residential complexes and commercial buildings.Here the investors can examine some basic statistics for the property market in Bulgaria during the last two years and the forecast for the long-term development of the sector.Property market during 2004According to the Bulgarian National Association for Real Estate the number of property deals in 2004 was about 200 000 amounting about 3,3 Billion Euro. During 2004 the rise of the property prices was between 20% and 70% depending on the region and the type of the property. The biggest growth was noted in the Sofia residential real estates and the estates in the biggest seaside city Varna and in the popular resorts of the country. Real estate and construction sector formed 10% of the GDP for 2004.Property market during 2005The property prices continued their gradual growth during 2005 reaching more than 30% increase at the end of the year. The property market statistics show growth in the sales of real estates. The analysis reveals a rise of the foreign investments. The interest is attracted mostly by commercial properties like offices and stores and residential holiday properties with possibility for renting. The hot property locations remain the same – sea and ski resorts, and the capital city. There are some emerging resorts like Pomorie at the Black Sea and Pamporovo in the Rhodope mountain, attracting tourists and investments. According to the specialists the perspective for the Bulgarian real estate market is good and the growth will continue in the next two years with the same or some lower pace.Property market forecastsBased on the fast growth rates of the property prices, the increase in the real estate sector can be predicted in the next two years until 2007. The prognosis is that the prices will continue to rise until they reach their real market value. The low cost of real estates now is due to the long period of free market absence in Bulgaria and the legal limitation during the communist regime. On the other hand the entry of foreign investment is the reason for the jump in the property prices. Even though the cost paid for the properties is still very low. The expected increase in prices until 2007 is not less than 40%. Colliers International in Real Estate Review:
“ In addition to increasing demand from foreign expatriates (and the expected increases
in tourism) the next few years also looks set to be revolutionary in terms of demand from
wealthier Bulgarians as many banks have now started to offer mortgage financing and as a result the demand for quality houses and apartments will continue to gradually increase. ” The predicted stable growth of the Bulgarian property market can be done based on the following factors: First of all the improved bank services and the mortgage credit politic are leading to lower interest rates, which stimulates the property purchases. Then there is a growth of the foreign investment in Bulgarian properties. The stable political situation in Bulgaria and the EU membership make favourable conditions for sound investments.The prognosis for the property prices depends on the specific area in Bulgaria. The properties in Sofia and the major Black Sea cities and resorts will get more and more expensive. The demand for properties in the ski resort is also getting higher, as the infrastructure and the ski facilities have been well developed and meet the criteria for a good quality ski vacation. For instance the ski village of Bansko is claimed to be the fastest growing resort in Europe. The prices of the old buildings are expected to remain steady after the EU entry. The number of property deals in the rural countryside may increase, as there are already some villages with properties owned by foreigners. Moreover the rural and the cultural tourism is experiencing a growth during the last years, making location as Veliko Tarnovo, Arbanasi, Ribaritca, Bojenci, Elena, Drianovo and many others.The real estate sector in Bulgaria in 2004 and 2005 and the Real Estate Market Index (REMI) are given here. The real estate sector in Bulgaria reached incredible heights in 2004 and 2005, influenced by the interest among foreigners in buying property in this country, and by increased purchasing power of Bulgarians due to the low interest rates of the mortgage loans offered by the banks. Bulgaria is a country with extremely low real estate and building plot prices compared with the EU states.The real estate prices rose more than 20 per cent in 2004 and more than 30 per cent in 2005, and are expected to increase by an annual average of 10 to 15 per cent for the next few years. The independent property newsletter Hot Property Alert: “ Bulgarian real estate has enormous potential. ” In 1994 The National Real Property Association (NRPA) was established. For the first time a Real Estate Market Index was published in October 2002, which in March 2003 reached 104.37. The next figure represents the Real Estate Market Index (REMI) indicating the increase in property sales in Bulgaria. Real estate deals reached a record high in 2004, according to the statistics. Most of the buyers are from the UK. According to the BBC, some of the UK-based banks even lent loans for acquiring immovable in Bulgaria.
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